NRI who stayed abroad most of his life (avg less than 60 days each year stay in India for last 28 years), stayed more than 180 days in the FY 2020-21 (240 days) and FY 2021-22 (277 days)). Due to COVID restrictions, he could not travel abroad in time. During FY 2022-23 he stayed 47 days in India and he has no intention of staying in India permanently. He has interest income from NRE Term deposits and the Department wants to tax interest on deposits for those two years in India. What is the position of Income Tax (keeping in mind of the Notifications under FEMA and FEM (DEPOSIT) REGULATIONS -2016? Whether interest is taxable in India or not? pls give reference to decided case laws in any in this matter
He has a PAN but never Filed ITR for any of the previous years... if he need to pay tax what will be the consequence (Penalty or interest etc.)
For exemption of NRE interest, residency needs to be examined under FEMA rather than under IT Act. If a person is FEMA non-resident, this interest would be exempt. Residency under FEMA is different from that under the Income-tax Act. Under FEMA, the residency is based on intention. If the intention was to go back abroad and the stay was for certain period, then the person can be considered as NR under FEMA.
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so, under the current circumstance, whether interest is taxable or not?
Needs to understand the facts and circumstances in detail to comment on the taxability.
- Did you filed tax return for calendar year 2020,2021 & 2022 in any other foreign country? Also what was your source of income in FY 2020-21 & 2021-22?
